Cryptocurrencies that rely on proof of work technology, notably Bitcoin and Ethereum, have been criticized for the amount of electricity consumed by mining.[1][2] This has led to greater interest in cryptocurrencies that use proof of stake.[3][4]

Bitcoin energy consumption

Electricity consumption of the Bitcoin network since 2016 (annualized) and comparison with the electricity consumption of various countries in 2019. The upper and lower bounds (grey traces) are based on worst-case and best-case scenario assumptions, respectively. The red trace indicates an intermediate best-guess estimate. (data sources: Cambridge Bitcoin Electricity Consumption Index, US Energy Information Administration; for details, see methodology)
Electricity consumption of the Bitcoin network since 2016 (annualized) and comparison with the electricity consumption of various countries in 2019. The upper and lower bounds (grey traces) are based on worst-case and best-case scenario assumptions, respectively. The red trace indicates an intermediate best-guess estimate. (data sources: Cambridge Bitcoin Electricity Consumption Index, US Energy Information Administration; for details, see methodology)

As of 2022, the Cambridge Centre for Alternative Finance (CCAF) estimates that Bitcoin consumes 131 TWh annually, representing 0.29% of the world's energy production and 0.59% of the world's electricity production, ranking Bitcoin mining between Ukraine and Egypt in terms of electricity consumption.[5][6]

George Kamiya, writing for the International Energy Agency, said that "predictions about Bitcoin consuming the entire world's electricity" were sensational, but that the area "requires careful monitoring and rigorous analysis".[7] One study by Michael Novogratz's Galaxy Digital, a cryptocurrency investment firm, claimed that Bitcoin mining used less energy than the traditional banking system.[8]

Sources of energy

Until 2021, according to the CCAF, much of the mining for Bitcoin was done in China.[9][10] Chinese miners relied on cheap coal power in Xinjiang[11][12] in late autumn, winter and spring, and then migrated to regions with overcapacities in low-cost hydropower, like Sichuan, between May and October. In June 2021 China banned Bitcoin mining[13] and the miners moved to other countries.[14] By December 2021, the global computational capacity had mostly recovered to a level before China's crackdown, with more mining being done in the U.S. (35.4%), Kazakhstan (18.1%), and Russia (11%) instead.[15]

As of September 2021, according to the New York Times, Bitcoin's use of renewables ranged from 40% to 75%.[1] According to the Bitcoin Mining Council, based on a survey of 32% of the global network, 58.5% of bitcoin mining used renewable energy resources in Q4 2021.[16] However, experts and government authorities have suggested that the use of renewable energy for mining may limit the availability of clean energy for ordinary uses by the general population.[1][17][18]

Proof of stake and other types of networks

While the largest proof of work (PoW) blockchains such as Bitcoin and Ethereum consume energy on the scale of medium-sized countries, demand from proof of stake (PoS) blockchains is on a scale equivalent to a housing estate. Various sources have cited 2021 figures compiled by TRG Datacentres in Texas of energy use in kilowatt hours per transaction: IOTA (0.00011); XRP (0.0079); Chia (0.023); Dogecoin (0.12); Cardano (0.5479); Litecoin (18.522); Bitcoin Cash (18.957); Ethereum (62.56); and Bitcoin (707). This has led to the identification of "eco-friendly cryptocurrencies”: Chia, IOTA, Cardano, Nano, Solarcoin and Bitgreen.[19][20]

Chia is based on a proof of space algorithm, which uses a lot less power because it relies on storage devices, not computer processing power.[21] However, the huge number of hard discs needed produces considerable amounts of electronic waste.[22][23]

Academics and researchers have used various methods for estimating the energy use and energy efficiency of blockchains. The Germany-based Crypto Carbon Ratings Institute (CCRI) studied the six largest PoS networks in May 2021. Its conclusions in terms of annual consumption (kWh/yr) were: Polkadot (70,237), Tezos (113,249), Avalanche (489,311), Algorand (512,671), Cardano (598,755) and Solana (1,967,930). This equates to Polkadot consuming 7 times the electricity of an average U.S. home, Cardano 57 homes and Solana 200 times as much. The research concluded that PoS networks consumed 0.001% the electricity of the Bitcoin network.[24]

The table below summarises the TRG and CCRI results alongside research from the University College London (UCL).[25] These sources give a measure of energy efficiency in terms of energy use per transaction.

Estimates of energy use per cryptocurrency transaction from 3 sources (Wh/tx)
Algorand (PoS) 0.17–5.34 2.70
Cardano (PoS) 12.39–378.54 51.59 547.9
Polkadot (PoS) 3.78–115.56 17.42
Tezos (PoS) 0.36–10.96 41.45
Bitcoin (PoW) 360,393–3,691,407 1,722,240 707,000
VisaNet (as a comparator) 3.58 1.5

Negative impact of mining

Bitcoin carbon emissions

Concerns about Bitcoin's environmental impact relate the network's energy consumption to carbon emissions.[26][27] The difficulty of translating the energy consumption into carbon emissions lies in the decentralized nature of Bitcoin impeding the ability of researchers to identify miners geographically and so examine the electricity mix used. The results of studies into the carbon footprint vary.[28][29][30][31] A 2018 study published in Nature Climate Change claimed that Bitcoin "could alone produce enough CO2 emissions to push warming above 2C within less than three decades."[30] However, three later studies in Nature Climate Change dismissed this analysis on account of its poor methodology and false assumptions with one study concluding: "[T]he scenarios used by Mora et al are fundamentally flawed and should not be taken seriously by the public, researchers, or policymakers."[32][33][34] According to studies published in Joule and American Chemical Society in 2019, Bitcoin's annual energy consumption results in annual carbon emission ranging from 17[35] to 22.9 MtCO2 which is comparable to the level of emissions of countries as Jordan and Sri Lanka or Kansas City.[31] However, other academic studies report a much broader range of carbon footprint estimates. For instance, according to a study published in Finance Research Letters in 2021, differences in underlying assumptions and variation in the coverage of time periods and forecast horizons have led to Bitcoin carbon footprint estimates spanning from 1.2 to 5.2 Mt CO2 to 130.50 Mt CO2 per year.[36]

Electronic waste

The total active mining equipment in the Bitcoin network and the related electronic waste generation, from July 2014 to July 2021.[37]
The total active mining equipment in the Bitcoin network and the related electronic waste generation, from July 2014 to July 2021.[37]

Researchers estimate that electronic waste generated by Bitcoin mining devices amounts to 30.7 metric kilotonnes annually as of May 2021. Due to the consistent increase of the Bitcoin network's hashrate, mining devices are estimated to have an average lifespan of 1.29 years until they become unprofitable and need to be replaced. Mining devices based on ASIC technology, the standard hardware for mining, are specialized and cannot be repurposed for another use, and hence become electronic waste once they become unprofitable.[37][38]

Efforts to reduce impact of mining

Some major cryptocurrencies are trying to implement technical measures to reduce the negative environmental impact.

Bitcoin developers are working on the Lightning Network. The aim is to reduce the energy demand of the network by moving most transactions off the blockchain.[39][better source needed]

Ethereum has been working on a transition from proof of work to a proof-of-stake algorithm, as used by Algorand, Cardano, and Tezos, for several years. The claim is that this would reduce the network's energy demand by 99%, though there are concerns about risks to the network.[39][40]

Possible remedies

The development of intermittent renewable energy sources, such as wind power and solar power, is challenging because they cause instability in the electrical grid. Several papers concluded that these renewable power stations could use the surplus energy to mine Bitcoin and thereby reduce curtailment, hedge electricity price risk, stabilize the grid, increase the profitability of renewable energy infrastructure, and therefore accelerate transition to sustainable energy and decrease Bitcoin's carbon footprint.[41][42][43][44][45]

Some hydroelectric plants are being used to mine Bitcoin.[46][47] According to the owners of Mechanicville Hydroelectric Plant, the mining saved the plant from dismantlement.[46]

Reversible computing chips and hash recycling could possibly provide some advantage to bitcoin mining in forms of reduced energy usage and e-waste, but the reversible computing is still at its early stages. The paper [48] suggests starting research and development on reversible bitcoin mining chips and also hash recycling for providing entropy to pseudorandom number generation.

A survey[49] on technologies approached cryptocurrencies' technological and environmental issues from many perspectives and noted the plans of using the methods of unconventional computing and grid computing to make bitcoin and ether both greener and more justified.

One paper has suggested that climate-related criticism of Bitcoin is primarily based on the network's absolute carbon emissions, without considering its market value. It argues that adding Bitcoin to a diversified equity portfolio could reduce the portfolio's aggregate carbon footprint.[36]

Some papers have suggested that cryptocurrencies and other blockchain applications might encourage a transition to a circular economy.[50] For example, token reward models could be used to incentivize individuals to recycle.[51]


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  28. ^ Foteinis, Spyros (2018). "Bitcoin's alarming carbon footprint". Nature. 554 (7691): 169. Bibcode:2018Natur.554..169F. doi:10.1038/d41586-018-01625-x.
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  41. ^ Fridgen, Gilbert; Körner, Marc-Fabian; Walters, Steffen; Weibelzahl, Martin (2021-03-09). "Not All Doom and Gloom: How Energy-Intensive and Temporally Flexible Data Center Applications May Actually Promote Renewable Energy Sources". Business & Information Systems Engineering. 63 (3): 243–256. doi:10.1007/s12599-021-00686-z. ISSN 2363-7005. S2CID 233664180.
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  43. ^ Moffit, Tim (2021-06-01). "Beyond Boom and Bust: An emerging clean energy economy in Wyoming". UC San Diego: Climate Science and Policy. Currently, projects are under development, but the issue of overgenerated wind continues to exist. By harnessing the overgenerated wind for Bitcoin mining, Wyoming has the opportunity to redistribute the global hashrate, incentivize Bitcoin miners to move their operations to Wyoming, and stimulate job growth as a result.
  44. ^ Eid, Bilal; Islam, Md Rabiul; Shah, Rakibuzzaman; Nahid, Abdullah-Al; Kouzani, Abbas Z.; Mahmud, M. A. Parvez (2021-11-01). "Enhanced Profitability of Photovoltaic Plants By Utilizing Cryptocurrency-Based Mining Load". IEEE Transactions on Applied Superconductivity. 31 (8): 1–5. Bibcode:2021ITAS...3196503E. doi:10.1109/TASC.2021.3096503. hdl:20.500.11782/2513. ISSN 1558-2515. S2CID 237245955. The grid connected photovoltaic (PV) power plants (PVPPs) are booming nowadays. The main problem facing the PV power plants deployment is the intermittency which leads to instability of the grid. [...] This paper investigating the usage of a customized load - cryptocurrency mining rig - to create an added value for the owner of the plant and increase the ROI of the project. [...] The developed strategy is able to keep the profitability as high as possible during the fluctuation of the mining network.
  45. ^ Bastian-Pinto, Carlos L.; Araujo, Felipe V. de S.; Brandão, Luiz E.; Gomes, Leonardo L. (2021-03-01). "Hedging renewable energy investments with Bitcoin mining". Renewable and Sustainable Energy Reviews. 138: 110520. doi:10.1016/j.rser.2020.110520. ISSN 1364-0321. S2CID 228861639. Windfarms can hedge electricity price risk by investing in Bitcoin mining. [...] These findings, which can also be applied to other renewable energy sources, may be of interest to both the energy generator as well as the system regulator as it creates an incentive for early investment in sustainable and renewable energy sources.
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  51. ^ Böhmecke-Schwafert, Moritz; Wehinger, Marie; Teigland, Robin (2022). "Blockchain for the circular economy: Theorizing blockchain's role in the transition to a circular economy through an empirical investigation". Business Strategy and the Environment: bse.3032. doi:10.1002/bse.3032. S2CID 247488751.